Typically when the stock market goes into ‘risk-off’ mode, biotechnology companies get hit harder than most. Not this year.
The Nasdaq Biotech Index is down year-to-date but outperforming the broader market by a decent margin. The unusual bear market alpha stems from a variety of factors, including depressed valuations heading into 2022 and, in recent months, a string of favorable drug development headlines.
The headlines have been particularly good for a trio of small cap biotechs. And with their stocks starting to move off lows, the momentum may have staying power.
Has Amarin Corporation Stock Bottomed?
Amarin Corporation plc (NASDAQ: AMRN) has released a host of updates around its lead program Vascepa, the first FDA-approved prescription for cardiovascular risk reduction. The company continues to develop the product for other indications and more signs are pointing towards an expanded market opportunity.
Vascepa capsules were found to reduce cardiovascular events in current or former smokers by 23% and 29% respectively in a comprehensive global study. As part of the REDUCE-IT trial, the drug was demonstrated to be effective in patients with LDL-Cholesterol, aka “bad cholesterol”, and various other cardiovascular risk factors.
The study was part of a seven-year assessment in conjunction with the FDA that wrapped up in 2018, but data continues to be analyzed and presented at various healthcare and investment conferences worldwide. Last month, Amarin presented new research on the effects of Vascepa in specific patient subgroups at the European Society of Cardiology (ESC) Congress in Barcelona, Spain.
As the presentations of Vascepa continue to pile up, market sentiment around its potential to provide therapeutic value across a range of cardiovascular risk groups is improving—as is Amarin’s share price. The popular penny stock appears to have found support after plunging as low as $1.11 in May 2022 thanks to its ongoing Vascepa awareness programs and aggressive expansion plans in Europe.
Why is Sorrento Therapeutics Stock Going Up?
Sorrento Therapeutics, Inc. (NASDAQ: SRNE), another biotech widely followed by retail investors, has doubled since May 2022. Given its decorated history of explosive moves, shareholders are hoping the latest party is just getting started.
The stock’s most recent catalyst came in the form of the FDA’s Fast Track Designation for the company’s SP-103 candidate, a next-gen treatment for acute low back pain. The topical lidocaine therapy is a triple strength version of ZTlido, a product owned by Sorrento’s Scilex subsidiary, and an alternative to ineffective and potentially addictive opioid prescriptions. The news was cheered by investors because 1) the designation sets up SP-103 for an accelerated path towards possible FDA approval and 2) the global low back pain market is estimated to become a $10 billion opportunity by 2026.
The news came a week after Sorrento unveiled positive clinical results of Abivertinib, a potential treatment for advanced non-small cell lung cancer (NSCLC). In the China-based study of more than 200 patients with NSCLC, the drug had a 56.5% overall response rate and a 28.2 month overall survival. The positive data paved the way for Sorrento to prepare for a pre-New Drug Application (NDA) meeting with the FDA and consider requesting regulatory approval in other countries.
This week Sorrento will be at the Morgan Stanley Global Healthcare Conference with a presentation slated for the morning of September 14th. If analysts like what the CEO has to say about the company’s oncology pipeline, the stock could build off last week’s impressive rally.
What Does Editas Medicine Do?
Editas Medicine, Inc. (NASDAQ: EDIT) develops treatments for serious diseases based on a genome editing platform that uses the highly touted Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR) technology. The company will also take part in the Morgan Stanley event where it is expected to discuss its latest business updates.
While the biotech does not yet have a commercialized product in its portfolio, positive updates around its development programs have outshined the meager financial results. EDIT-301, a potential therapy for sickle cell disease, achieved a successful engraftment involving the first patient enrolled in the closely followed RUBY trial. This marked the first time that Editas’ engineered AsCas12a enzyme was used to edit human cells in a clinical setting. Management hopes to have initial clinical data from the Phase 1 study by the end of this year.
Meanwhile, Editas is also making progress with its BRILLANCE study evaluating EDIT-101 in adult and pediatric patients with Leber Congenital Amaurosis 10 (LCA10), a degenerative disorder of the retina. A study of EDIT-103 for the treatment of a different retinal disorder, RHO-adRP, is also on track to move forward by year end.
Robert Baird recently became the latest on Wall Street to call Editas Medicine a buy and gave it a $30 price target that suggests it can double from here. The research firm is hosting its own healthcare conference on September 13th that Editas management will participate in, its third analyst event in less than a week.